GST Circular clarifying treatment of goods sent/taken out of India for exhibition or on consignment basis and procedural aspects under GST

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Central Board of Indirect Tax and Customs clarified through circular No.108/27/2019-GST dated 18th July, 2019 about procedures, documentation and implications under GST on transaction with respect to goods sent/taken out of India for exhibition or on consignment basis for export promotion. Key aspects of the same have been highlighted below.

  1. Activity of sending/ taking the goods out of India for exhibition or on consignment basis for export promotion do not constitute “supply” except when such activity satisfy the tests laid down in Schedule I of the Act.
  2. The registered person engaged in such activity needs to maintain a record in the format specified in circular as annexure.
  3. The goods can be sent/taken outside India on “approval basis” shall be accompanied by delivery challan issued in accordance with rule 55 of CGST Rules, 2017 [i.e. Transportation of goods without issue of invoice]
  4. Since such transactions will not constitute “supply”, execution of a bond or LUT is not required.
  5. The supply would be deemed to have taken place, on the expiry of six months from the date of removal if the goods are neither sold abroad nor brought back within six month. Hence, the tax invoice is to be issued once the sale is confirmed or on expiry of six months from the date of removal in case goods are neither sold nor brought back within the stipulated time.
  6. Refund claim can be preferred only once sale is confirmed and not at the time of sending of goods on consignment. In case of deemed sale where neither sale is confirmed nor goods are brought back within six months, refund claim cannot be preferred under the option of export with payment (Rule 96). However, in such cases, refund claim can be preferred under LUT option.
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